SHIRLEY GRIFFITH: Welcome to THIS IS AMERICA in VOA Special English. I’m Shirley Griffith.

CHRISTOPHER CRUISE: And I'm Christopher Cruise. This week on our program we tell you about pawn shops in the United States.

SHIRLEY GRIFFITH: Pawn shops are businesses where people bring their possessions to get a small, short-term loan or to sell. The United States has about twelve thousand of them. Pawn shops may be large or small, clean or dirty, but they are all full of stories about people's lives.

This may explain the popularity of reality programs like "Pawn Stars" on the History Channel.

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It features a family of pawnbrokers in Las Vegas, Nevada. "Hard Core Pawn" on TruTV features a pawnbroker and his grown son and daughter in a large pawn shop in Detroit, Michigan.

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These shows are among the most-watched programs on the two cable channels. But some pawnbrokers consider them misleading.

Most of the time the programs show people who want to sell their items. Pawnbrokers say very few customers want to do that. They just need a small loan for a short time.

CHRISTOPHER CRUISE: People who want "fast cash" can get a loan based on the resale value of their item. This is what it means to pawn something. The pawnbroker will sell the item if the loan is not repaid on time.

But sometimes people do want to sell an item. The pawnbroker might buy it and then try to resell it for a higher price. Pawnbrokers say twenty-five to thirty-five percent of their money comes from selling items.

Some pawn shops specialize in jewelry, but most of them accept a wide variety of items.

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SHIRLEY GRIFFITH: Pawnbrokers in the United States have a trade group. The National Pawnbrokers Association began in nineteen ninety-eight. It seeks to improve the image of an industry that has a long history but not a very high place in public opinion.

Kevin Prochaska is one of the leaders of the association. He has more than thirty years of experience as a pawnbroker and owns thirteen pawn shops in Texas.

KEVIN PROCHASKA: "What we do is, somebody comes to us with a piece of personal property and they own that piece of property. They can either sell the item to us, but the other transaction that we do is we will advance money on that personal item.

"We've 'liquified' their asset. They’re not really in any debt, because they’ve just exchanged an item that they own for cash. All the customer has done is, he’s taken his property and turned it into cash.”

Kevin Prochaska says many of his customers keep coming back to his pawn shops.

KEVIN PROCHASKA: "I think our average customer is probably between twenty-five and forty-five years old, and in my experience your turnover of customers is about twenty-five percent. So you expect that about one out of four customers walking in the door is probably a new customer. And out of the four customers walking out the door, one of them won't be back.”

CHRISTOPHER CRUISE: There are pawn shops in some of the wealthiest areas in the United States. But most pawn shops are in poorer neighborhoods. Most people who get a loan from a pawn shop do not earn much money and have not saved much money. Their access to other forms of credit is limited.

In a pawn transaction, the customer gets a short-term loan of about fifty to seventy-five percent of the value of an item. The item itself acts as the security or collateral for the loan. The term of the loan is usually one to six months.

Customers can get the item back at any time by repaying the loan plus the interest they owe. Or they can just pay the interest and keep the item at the pawn shop. In some cases, if the item is worth a lot, it might be safer in the store than in the person's home.

SHIRLEY GRIFFITH: Pawnbrokers say between seventy and eighty percent of pawned items are reclaimed by their owner. They say the higher the value of the item, the more likely that the customer will pay back the loan.

The amount of a loan depends on the location of the pawn shop and the kinds of items it accepts. The typical loan for a pawned item is fifty to one hundred dollars. Pawnbrokers say customers most often need money for gasoline, medicine, electricity, car repairs and rent.

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CHRISTOPHER CRUISE: Pawnbrokers say computerized records and cooperation with the police have reduced the number of stolen items brought to pawn shops. Some shops make video recordings of their transactions. And most states require people to show identification if they want to pawn something.

Rules for pawn shops differ from state to state. Some states, for example, limit the interest rate that pawn shops can charge on loans to three and a half percent a month. Other states allow rates as high as twenty-five percent. Not surprisingly, states with stronger regulations have fewer pawn shops.

SHIRLEY GRIFFITH: You might think the recession was good for business at pawn shops. But pawnbrokers say their sales of items dropped just like at other stores, while more people came to them seeking loans.

In the nineteen thirties, many banks failed during the Great Depression. Pawn shops were often among the only places where people could get money.

People do not need a job or a good credit history to get a loan from a pawnbroker. The most commonly pawned items are electronics, musical instruments, tools and expensive pieces of clothing. But people can get a loan on almost anything of value.

Kathy Pierce is one of the owners of Monster Pawn in Bloomington, Illinois. She is a member of the board of directors of the National Pawnbrokers Association.

KATHY PIERCE: "I take in lawn mowers and bicycles and canoes and concrete saws and drills and DVD players. I know a little bit about a lot of stuff."

CHRISTOPHER CRUISE: Kathy Pierce says the average loan she makes is sixty dollars. She also says she has seen an increase in the number of middle class customers.

KATHY PIERCE: "Now I see everybody. I see teachers. I'm in a small community with a lot of very large companies. A lot of people have jobs in my community -- that's not our problem. But bills are expensive and the electricity still goes up and people don’t get raises. Gas prices at four dollars this summer, I will be busy."

Ms. Pierce says no one is forced to use her services, and is happy being a pawnbroker.

KATHY PIERCE: "I love what I do. I found out I was good at it. And every day is different, and I love my customers. These people are really endearing and they become part of your family. They're a part of your lives just as much as you’re a part of them.”

SHIRLEY GRIFFITH: But not everyone feels the same way about pawnbrokers. Critics have accused them of abusing the poor by charging high interest rates. Pawnbrokers say high rates are the result of high business costs including security and storage.

Another criticism involves "low-balling." This is telling an uninformed customer that an item is worth less than it really is. But the opposite also happens. Customers sometimes invent stories about items and claim they are worth more than they are.

This is why pawnbrokers must know a lot about many different things -- antiques, jewelry, furniture. Items that may have been in families for generations. They have to decide the age of an item, whether it is real or fake, valuable or worthless.

CHRISTOPHER CRUISE: Sometimes pawnbrokers speak with an expert or do research through books and the Internet. But most of the time they depend on their own years of experience.

Most pawnshops in the United States are owned by an individual or a family. Some companies, however, have been buying pawn shops and building national chains.

These companies have tried to change the image of a pawn shop by having clean, well-lit and well-operated stores. Many other pawn shops are making these changes as well, as the industry tries to convince more Americans to use its services.

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